World Business

BP to set aside $20b for oil spill claims

(Xinhua)
Updated: 2010-06-17 09:33

WASHINGTON: US President Barack Obama on Wednesday announced that British oil giant BP has agreed to put about $20 billion into an escrow account for claims related to the Gulf of Mexico oil spill, after talks with top BP executives in the White House.

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During the meeting with Obama and Vice President Joe Biden, Carl-Henric Svanberg, Chairman of BP, agreed to fund the escrow account. BP is also to create a 100 million dollar compensation fund for oil industry workers left jobless after the oil disaster began.

In his remarks after the talks, Obama said talks with BP executives were "constructive," and the 20 billion figure is not a cap. He said BP is a "strong, and viable company" able to pay for the fund.

The fund is to be administered by Kenneth Feinberg, who oversaw the 9/11 victims compensation fund, according to the New York Times. Details of the agreement is still being worked out, but the preliminary terms would allow BP several years to deposit the full amount into the fund, so it could better manage cash flow, maintain its financial viability and avoid scaring off investors, according to the report.

After Obama spoke, Svanberg said the company will not pay any further dividends this year, and it "will live up to all its legitimate responsibilities," to make sure all proper claims handled swiftly.

Obama said on Tuesday night he will ask BP, whose "recklessness " caused the disaster in the Gulf, to set aside "whatever resources are required" to compensate workers and business owners harmed by the oil spill. The fund is to be administered by an independent third party, "in order to ensure that all legitimate claims are paid out in a fair and timely manner."